What is ChexSystems?
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ChexSystems is an association of financial institutions which develop a database of delinquent customers. The purpose of ChexSystems is to help limit fraud and ensure that only financially responsible people can open and maintain a checking account.
Member banks of the ChexSystems network (which compromises roughly 80% of all banks in the United States) report on their customers who exhibit poor financial management skills, and being on file in the ChexSystems can be financially damning.
The policy banks use for reporting customers to ChexSystems vary between institutions and the reason usually given is “closed for cause.” This reason is very vague and can mean anything from serious fraud to multiple overdrafts.
Unlike credit scores, ChexSystems is more of an absolute than a score: if you’re on it, you’re more than likely going to be denied opening an account at a major institution - for the next seven years.
So, keep your financial future in mind when you write your checks and pay your bills: getting reported to ChexSystems can be very damaging and seriously limit you for the next several years.
[tags]chexsystems, chex systems, telecheck[/tags]
2 Comments
Kent Oz
June 30th, 2007
at 4:42am
I got on ChexSystems in 1991 after an accident sent me to a hospital for months and wrecked my credit. Not being able to work subsequently didn’t help in re-paying anything. It isn’t true (though ChexSystems claims the contrary) that you’ll be removed after 7 years. That clock can be re-started over and over again — all it takes is for a debtor to re-submit details of the debt, whether or not it’s been paid, partially paid, or written off. Many companies re-submit to ChexSystems automatically at the end of every year.
Hugoton Horatio
July 3rd, 2007
at 7:07pm
Seems in spite of their intent to make money, they are going to be
throwing a lot of business away over this system. Unless they own all
the lone sharking title loan and pawn shops in town.